Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares Russell 2000 ETF / Technical Analysis

<ul>
<li>Since early-October we have discussed our expectation for a bear rally, targeting the 200-day MAs on the $IWM and $SPX; targets were hit (within 0.5% of hitting on SPX).</li>
<li>We are now seeing short-term uptrend breaks on the IWM and the DJIA; this is a good time to get defensive and/or take profits, as the 1.5-month rally appears over.</li>
<li>We expect more weakness in the weeks ahead, and we cannot rule out another test of the 2022 lows.</li>
</ul>


Since early-October we have discussed our expectation for a bear rally, targeting the 200-day MAs on the $IWM and $SPX; targets were hit (within 0.5% of hitting on SPX).
We are now seeing short-term uptrend breaks on the IWM and the DJIA; this is a good time to get defensive and/or take profits, as the 1.5-month rally appears over.
We expect more weakness in the weeks ahead, and we cannot rule out another test of the 2022 lows.


Time to Get Defensive After 1.5-Month Uptrend Breaks; High Yield Spreads Widening Much Like Mid-Aug.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>With just over two months left in the review period, we expect three changes to the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> at the March rebalance.</li>
<li>
<a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> and <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> could replace <a href="https://www.smartkarma.com/entities/toyobo-co-ltd" target="_blank" data-smartkarma-citation="entities:6187:1" rel="noopener">Toyobo Co Ltd (3101 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-light-metal-holdings" target="_blank" data-smartkarma-citation="entities:1485:1" rel="noopener">Nippon Light Metal (5703 JP)</a> and <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707 JP)</a>.</li>
<li>As with the last rebalance, there will be a large funding trade estimated at JPY 417bn. There are many stocks with over 0.5x ADV to sell.</li>
</ul>


With just over two months left in the review period, we expect three changes to the Nikkei 225 (NKY INDEX) at the March rebalance.

Lasertec Corp (6920 JP), Oriental Land (4661 JP) and Renesas Electronics (6723 JP) could replace Toyobo Co Ltd (3101 JP), Nippon Light Metal (5703 JP) and Toho Zinc (5707 JP).
As with the last rebalance, there will be a large funding trade estimated at JPY 417bn. There are many stocks with over 0.5x ADV to sell.


Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade

<ul>
<li>Our Russell 2000 (IWM) and S&amp;P 500 targets for this rally have been the 200-day MAs, coinciding with YTD downtrends.</li>
<li>The Russell already hit this target while the S&amp;P is closing in, less than 1% away.</li>
<li>Still, the vast majority of signals point to further upside ahead for the market indexes, and a possible end to the bear market.</li>
</ul>


Our Russell 2000 (IWM) and S&amp;P 500 targets for this rally have been the 200-day MAs, coinciding with YTD downtrends.
The Russell already hit this target while the S&amp;P is closing in, less than 1% away.
Still, the vast majority of signals point to further upside ahead for the market indexes, and a possible end to the bear market.


Rally Continues Following Breaks in USD & 10-Yr Yield; Buy Ideas in Energy & Consumer Discretionary

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>FOMC raised the FF rate by 75bp for the third consecutive time, taking it to 3-3.25% as expected. We expect the Fed Funds rate to peak at 5% in Mar’23.</li>
<li>The more aggressive monetary tightening by the US (outlined in the SER) will likely bring forward the US recession to Q2CY23 (two quarters ahead of our previous forecast). </li>
<li>USD will continue to strengthen, weakening the prospects for emerging markets. India, Indonesia, Vietnam will be safe havens, and Japan will continue riding the weak Yen. Avoid EM-creditor China. </li>
</ul>


FOMC raised the FF rate by 75bp for the third consecutive time, taking it to 3-3.25% as expected. We expect the Fed Funds rate to peak at 5% in Mar’23.
The more aggressive monetary tightening by the US (outlined in the SER) will likely bring forward the US recession to Q2CY23 (two quarters ahead of our previous forecast). 
USD will continue to strengthen, weakening the prospects for emerging markets. India, Indonesia, Vietnam will be safe havens, and Japan will continue riding the weak Yen. Avoid EM-creditor China. 


FOMC Acknowledges Its Policy Error and Will Front-Load Rate Hikes

<ul>
<li>Fed chair Powell pledged at Jackson Hole to "keep at it until the job is done". After M2 growth averaging 18.2%YoY in Mar'20-Feb'22, much more monetary tightening is still needed. </li>
<li>The Fed Funds rate will rise to 3% next month, 3.5% by end-year and 4% by Mar'23. The consequence will be recession by Q1CY24, as telegraphed by the yield-curve. </li>
<li>Biden's two legislative wins this month will boost the economy (especially manufacturing), aid the climate fight and lower drug costs in the medium-term. But their net fiscal impact is minimal.</li>
</ul>


Fed chair Powell pledged at Jackson Hole to "keep at it until the job is done". After M2 growth averaging 18.2%YoY in Mar'20-Feb'22, much more monetary tightening is still needed. 
The Fed Funds rate will rise to 3% next month, 3.5% by end-year and 4% by Mar'23. The consequence will be recession by Q1CY24, as telegraphed by the yield-curve. 
Biden's two legislative wins this month will boost the economy (especially manufacturing), aid the climate fight and lower drug costs in the medium-term. But their net fiscal impact is minimal.


Biden's Legislative Wins Provide a Boost to Growth, but Recession Still Inevitable

United States

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Dow Jones Industrial Average (INDU INDEX)

Dow Jones Industrial Average (INDU INDEX)

Time to Get Defensive After 1.5-Month Uptrend Breaks; High Yield Spreads Widening Much Like Mid-Aug.

Our targets for this bear rally have been hit, which were the 200-day MAs on $IWM and $SPX (within 0.5%). Now seeing short-term uptrend breaks on...

Vermilion Research

Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade

There should be 3 changes to the NKY in March. The potential adds have outperformed the potential deletes and there will be large pre-positions on...

Brian Freitas

Rally Continues Following Breaks in USD & 10-Yr Yield; Buy Ideas in Energy & Consumer Discretionary

Our $IWM target (its 200-day MA) has been hit and our $SPX target is less than 1% away. Still, the rally is poised to continue following breaks in...

Vermilion Research

FOMC Acknowledges Its Policy Error and Will Front-Load Rate Hikes

FOMC has tightened 300bp in Mar-Sep'22 & is set to tighten another 125bp by end-22. US recession will likely begin Q2CY23. Avoid stagflationary...

Prasenjit K. Basu

Biden's Legislative Wins Provide a Boost to Growth, but Recession Still Inevitable

RGDP growth of 2%YoY in H1CY22 & 53yr low of 3.5% unemployment affirm the US isn't in recession. But Fed Funds will reach 3.5% by end-year,...

Prasenjit K. Basu